MA Governor Proposes Handing Local Pension Fund
Management to the State

February 15, 2007 (PLANSPONSOR.com) - Massachusetts'
Governor Deval Patrick proposed a measure that could force
the state's lagging municipal public pension funds to
relinquish investment control of their assets, according to
the Boston Globe.

The 107 funds, some of which invest collectively
for several cities and towns, are said to have
underperformed the state fund and are less than 80%
funded. In order to be affected by the move, the local
funds will have to have underperformed the state
program by 2.25% over the last five years.

According to the news report, the investment
performance of the state fund, meanwhile, is
estimated to be among the top 2% of funds in the country
over the last three years. The state fund’s
annualized returns were 7.04% between 2001 and
2005.

Treasurer Timothy Cahill, who manages $46.7 billion
in retirement funds for the state’s Public Reserves
Investment Trust for teachers, state employee retirement
funds, and about 28 county, municipal, and other
retirement systems, is backing Patrick’s proposal,
saying it will “save local communities significant
money” in the long run, according to the
Globe.

The move was also promptedby an inspector general’s report released last
year that revealed that the
Middlesex pension officials rigged construction bids to
favor certain contractors with ties to board members (See
Massachusetts May Remove Pension Fund Board
). The bids were for the construction of the system’s
new headquarters.